IEA revises China oil outlook for 2010

The International Energy Agency (IEA) has revised its global oil demand forecast for the second time this year, following a double digit upwards surge in China’s year-on-year apparent oil demand in January.

Global oil demand has been revised upwards by 70,000 barrels per day (b/d) for both 2009 and 2010 on higher‐than‐expected non-Organisation for Economic Co-operation and Development (OECD) data, says the IEA in its monthly Oil Market report.

Global oil demand is now estimated at 85.0 million b/d in 2009, and is expected to rise to 86.6 mb/d in 2010.

"This year's global oil demand growth will be driven entirely by non‐OECD countries, with non‐OECD Asia alone representing over half of total growth," says the IEA. "The revisions were almost entirely concentrated in China, where apparent demand surged by an astonishing 28.0% year‐on‐year in January according to preliminary estimates, although these figures, which assumed that refinery runs in January were unchanged versus December, may be partly distorted by product stocking."

The IEA also revealed it revised up its projected non-Organisation for Economic Co-operation and Development (OECD) oil demand for 2009 and 2010.

Total oil demand for non-OECD countries has risen from the agency's previous assessment by 70,000 b/d, reaching a now estimated 39.5 million b/d in 2009, which is equivalent to a +2.2% or +0.8 million b/d year‐on‐year. It is expected to increase to 41.2 million b/d in 2010, equal to +4.3% versus 2009 and 190,000 b/d higher than previously anticipated.

The consistent increase in Chinese oil demand and consumption, yet a fall in production has led the country to increase its imports over the last few years.

This week, China's General Administration of Customs released its latest Chinese import data for February, showing volumes entering the country jumped by 58% in February year-on-year to reach 4.83 million b/d. This was the second highest crude import level in Chinese history, only surpassed by December 2009 levels, which exceeded 5 mb/d.

An in-depth article on China's oil outlook will appear in the April issue of Energy Risk and online at www.energyrisk.com or www.risk.net from the first week of April.